Natural gas futures are near 19-year lows in terms of their price relative to oil. Natural gas has been hammered in the last two months, while oil has stormed new 2009 highs. At some point this divergence has to give, especially since natural gas short interest remains high. is at record levels.
Oil Traders Blog: At the current levels, the ratio between both commodities [oil vs. natural gas] stands at 25 to 1. Looking at data going back to early April 1990, the average ratio of crude oil to natural gas futures prices stands at 9.38.
One need not commit to a bullish or bearish stance to take advantage of this. Being long natural gas and short oil would simply be asking for this ratio to mean-revert, regardless of whether this were due to oil falling or natural gas rising.
(Chart Via Future Source)
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